Jersey Finance chief executive Joe Moynihan added, however, that looming changes in the international tax environment, prompted by greater co-operation between countries, in particular the US, ‘will not be without its challenges’.
At the weekend the G7, a group of leading industrial countries, announced that it intends to introduce a 15% global minimum corporation tax rate to stop giant firms, like Amazon and Facebook, shifting profits to low-tax jurisdictions.
Speculation has grown over the impact this could have on Jersey’s zero-ten tax system, under which many firms pay a nil rate.
In an online blog, Mr Moynihan said that the proposals were long in the making and still required broader international backing.
He said: ‘With the G7 having now agreed a number of measures and a way forward, the next step will be for the measures to be agreed by the G20 to gain widespread international approval. Again, that will be no mean feat, but we can anticipate progress on that later this year.
‘So what does this mean for Jersey? We have been tracking these developments for some time, via the Organisation for Economic Co-operation and Development (where Jersey takes its lead on international regulatory matters, and where the Island has its own “seat at the table” in international negotiations), while also keeping an eye on major moves by the EU and US. As such, these proposals are expected.
‘Much of the detail has still to be agreed but there are aspects of the design which are encouraging. The proposals are aimed squarely at tackling large multinational companies, particularly large tech companies, which are not a significant feature of Jersey’s business model.’
He said that the proposed design of OECD proposals on the global minimum tax rate ‘aligns closely’ with Jersey’s existing tax model and exempts investment funds, which accounts for $500 billion of management business in Jersey.
He added: ‘Of course, multilateral changes to the global corporate tax environment will not be without its challenges.
‘These proposed changes have the potential to impact all countries, and it is absolutely our belief as a jurisdiction that any reforms must be implemented on a level playing field, balancing the interests of small jurisdictions as well as larger ones; developed as well as developing countries.’
During yesterday’s States sitting External Relations Minister Ian Gorst said that any changes that may need to be made to zero-ten would take time to happen.
‘The regime we have in place suits Islanders and our economy. We should not apologise for the regime we have in place – it is clear and transparent,’ he said. ‘Any change would go through appropriate consultation processes, through the States Assembly and through Scrutiny. There would be no knee-jerk change and these things take time anyway.’
